Two thousand years ago, Xunzi in the Spring and Autumn Period of China and the Warring States Period said in the chapter "Xunzi Rich Country" that the governance of the country should "save its flow, open its source and consider it from time to time", which has also become the ** of today's idiom to open source and reduce expenditure. Among them, the fundamental purpose of reducing expenditure is to eliminate obstacles and losses in production and circulation, and to regulate and promote production. Its value is not obsolete even today.
At present, Chinese enterprises are facing an increasingly bad business environment, the rise of international protectionism, the European and American technology blockade of China, which has a great impact on business operations, and the market competition is becoming increasingly fierce, there are many competitors in all walks of life, in order to survive and develop in such an environment, enterprises must find their own advantagesThe cost strategy is the eternal strategy of enterprises in the face of competition.
The cost strategy requires that enterprises must have the ability to operate at low cost, and the operating costs of enterprises are mainly composed of production costs, sales expenses, management expenses, and financial expenses, of which production costs are the most important costs of most manufacturing enterprises, including direct materials, direct labor, asset depreciation, fuel power, manufacturing expenses and period expenses and other six major items.
Reducing costs and increasing efficiency starts from procurement
As we can see from the image above,The cost of raw materials in the manufacturing industry often exceeds 50% of the total cost, so the strengthening of the management of procurement business is the priority object that our enterprises must give priority to reducing costs and increasing efficiency.
According to relevant statistics, the impact of a 1% reduction in procurement costs on corporate profits is equivalent to a 10% increase in sales. For a mature market, a 10% increase in sales is a difficult thing to do. Reducing procurement costs by 1% is relatively easy to achieve for the current average level of social procurement. This requires enterprises to upgrade procurement management to a strategic level and formulate corresponding procurement strategies.
Procurement strategy is the general policy on procurement formulated by an enterprise (organization) according to its own development strategy, covering procurement channel management, procurement category management, procurement cost management, procurement execution management, procurement organizational structure design and talent echelon construction. The daily procurement operation of the enterprise should be carried out under the guidance of the procurement strategy. The day-to-day operation of procurement can be divided into two types according to the size of the valueStrategic Sourcing EffortswithDay-to-day procurementStrategic sourcing work includes: sourcing, business access and contract management, business evaluation and relationship management, cost management, procurement process management, and stakeholder collaboration.
Purchasing department in realityUsually 60%-80% of the energy is spent on daily procurement transactional work, such as: order establishment and tracking, first-class merchant delivery collaboration, logistics tracking, warehouse collaboration, reconciliation, bill processing, etc. WhileWith the development of ICT technology, the introduction of digital intelligence tools by enterprises can help procurement personnel to be freed from transactional work and devote more time to strategic workMake.
I am good at reducing costs and increasing efficiency
The types of procurement by manufacturing companies can be broadly divided into four categories:Strategic material procurement, parts procurement, MRO parts procurement and equipment asset procurement。Strategic material procurement, this kind of procurement of commodities for resource materials, its first business is more concentrated, relatively strong, the first elasticity is small, but the enterprise procurement volume is large, the demand is stable, and the planning is strong.
ForProcurement of strategic materialsFor example, on March 12, 2023, EGing Optoelectronics, a customer of U9 Cloud in the photovoltaic industry, signed a silicon wafer purchase and sales contract with Shuangliang Energy Conservation (see the announcement of the relevant listed company for details), which is often used in the photovoltaic cell industry and the non-ferrous metal processing industry.
Parts procurementThe type is characterized by the purchase of materials and production plans are closely related, the demand is relatively stable, the procurement of parts and components is often specially produced, this type of business is more concentrated, the procurement delivery time changes frequently, the real-time requirements for business collaboration are high, and the business will often have to ensure the safety of its production process, and there can be no shutdown and waiting for materials. In order to reduce costs to the greatest extent, the VMI management model is often used for this kind of business, and the settlement mode of the business has online settlement, offline settlement, warehousing settlement and other modes, and how to mobilize the enthusiasm of this kind of business is the main goal of enterprise business management.
We suggest that for the cost reduction and efficiency increase of parts procurement, we can select 2 or 3 qualified suppliers for each type of part, and mobilize the enthusiasm of enterprises through the quota of suppliers based on the performance of the suppliers. The introduction of digital systems can greatly enrich the management of enterprises on the best business, for example, Yonyou U9 Cloud supports the performance management of the best business and provides eight ways to manage the quota of the first business, the main quotient priority, sequential rotation allocation, dynamic proportional allocation, fixed proportional allocation, period equilibrium dynamic proportion, etc. This procurement method is often used in OEMs and auto parts first-class and second-class suppliers.
There is another type of procurementMRO parts procurement。This kind of procurement of materials is used for the maintenance and operation of the equipment, spare parts, logistics support, office supplies and other items, characterized by long-term continuous random procurement, demand is scattered, the amount is generally low, and it is more sensitive to fluctuations.
For the procurement of such materials to reduce costs and increase efficiency, we suggest that the procurement process can be transparent and reduce procurement costs by docking with industrial product e-commerce platformsThe integration of UFIDA U9 Cloud and UFIDA Procurement Cloud has realized the direct connection with the leading domestic industrial products e-commerce platform, and has been widely used in some leading enterprises in the domestic industry, such as CTI Navigation and Shuanghuan Transmission.
There is another type of procurementMRO parts procurement。This kind of procurement of materials is used for the maintenance and operation of the equipment, spare parts, logistics support, office supplies and other items, characterized by long-term continuous random procurement, demand is scattered, the amount is generally low, and it is more sensitive to fluctuations.
For the procurement of such materials to reduce costs and increase efficiency, we suggest that the procurement process can be transparent and reduce procurement costs by docking with industrial product e-commerce platformsThe integration of UFIDA U9 Cloud and UFIDA Procurement Cloud has realized the direct connection with the leading domestic industrial products e-commerce platform, and has been widely used in some leading enterprises in the domestic industry, such as CTI Navigation and Shuanghuan Transmission.
In addition, there is another type of procurement, which is:Equipment asset procurementIt is characterized by less batch, less frequency, high value, and subsequent physical assets and fixed asset management requirements. The procurement process of equipment assets is often based on the amount of procurement for bidding and procurement; Standardize the equipment asset procurement process through inquiry, price comparison and approval process to reduce costs and increase efficiency.
U9 Cloud integrates UFIDA BIP Procurement Cloud to support the whole process of equipment asset procurement management such as enterprise bidding and procurement, Internet sourcing, contract signing, asset warehousing, transfer of fixed assets and financial accounting.
The manufacturing industry has introduced U9 Cloud to reduce costs and increase efficiency
The value of reducing costs and increasing efficiency in procurement is mainly reflected in the following aspects:
Automate the procurement process
Enterprises can automate the procurement process, reduce manual intervention, and improve procurement efficiency. For example, enterprises can use the electronic procurement system to automatically publish procurement requirements, receive, compare, and place orders, thereby saving labor costs and time costs.
** Business management optimization
It can help enterprises better manage business information and realize centralized storage and real-time update of business information. Through the evaluation and analysis of the best businessmen, enterprises can choose better quality suppliers to reduce procurement costs.
Data analysis and decision support
It can help enterprises collect and analyze a large amount of procurement data, providing valuable insights and decision support for enterprises. By mining and analyzing historical data, companies can identify potential cost savings opportunities and develop more effective procurement strategies.
Chain synergy
It can help enterprises achieve real-time collaboration with the best business and improve the overall efficiency of the first chain. For example, enterprises can reduce inventory costs and improve the response speed of the chain by sharing inventory information and collaborating demand.
Risk management
It can help enterprises better identify and manage risks in the procurement process. Through the credit evaluation, contract management and other functions of the first business, enterprises can reduce procurement risks and ensure the stable operation of enterprises.
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In short, U9 Cloud can help enterprises optimize the procurement process, upgrade the business management, improve data analysis and decision support, strengthen the chain collaboration and improve risk management, so as to reduce costs, improve efficiency, and create greater value for enterprises.